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Why Belarus KGB Detained the Country’s Former Top Businesman

18 March 2016

On 11 March, the Belarusian State Security Committee (KGB) detained Yury Chyzh, one of Belarus' richest businessmen who used to be on friendly terms with President Alexander Lukashenka.

The European Union once viewed him as "Lukashenka's purse" and he was...

Former Belarusian Oligarch Chyzh and KGB Chairman Vakulchyk

On 11 March, the Belarusian State Security Committee (KGB) detained Yury Chyzh, one of Belarus' richest businessmen who used to be on friendly terms with President Alexander Lukashenka.

The European Union once viewed him as "Lukashenka's purse" and he was on the EU sanctions list until recently, seeming to be "untouchable".

Chyzh's detention followed rough times for his business. Several theories may explain his detention: the authorities are simply trying to raise cash, Chyzh became a victim of a struggle inside the regime, or Belarus is trying to challenge the interests of Russian businessmen.

Harvesting Potatoes with Lukashenka

Yury Chyzh​ is just one of many talented businessmen to emerge in Belarus in the 1990s. But he differs from many other entrepreneurs because he managed to expand his business empire and built close personal relations with Lukashenka, who does not have a pro-business reputation.

Just two years ago, Chyzh, general director of the Triple Holding, topped the ranking of the most influential businesspeople in Belarus. His business empire focused on oil refining, but had interests in many spheres – from producing soft drinks to construction. He was a regular at the president's home and accompanied him on public occasions – from foreign visits to hockey matches and harvesting potatoes.

In 2012 the European Union put Chyzh on the list of sanctioned persons because he was "Lukashenka's purse". According to the European Union, Chyzh "provided financial support to the Lukashenka regime".

Chyzh never played an important political role, although he executed some deals at the request of the government. Among them, the so-called solvents business – in the early 2010s Chyzh was involved in the controversial trade of refined Russian oil products. The Belarusian state has profited from the deals. So has Chyzh.

Chyzh's problems

On 15 March, KGB chairman Valery Vakulchyk told journalists that his agency arrested Chyzh for tax fraud. According to the KBG chairman, Chyzh tried to flee the country by speeding 220km per hour towards the Western border, trying to escape from the Belarusian special services who eventually managed to catch him.

When asked about whether Lukashenka knew about the arrest, Vakulchyk said that he had made the decision on his own. Vakulchyk also added that "just because someone has had his photo taken with Lukashenka or played hockey with him, it does not mean he receives any special treatment."

The first signs of Chyzh's problems emerged after a company owned by Triple failed to complete construction of a hotel in the centre of Minsk on time. Officials started to hint that a new investor was coming to replace Chyzh. At the same time, the government had to prolong the terms of a state-commissioned contract on construction of army housing for Triple.

This year, Chyzh failed to even make it into the Top 10 list of the most influential businesspeopleRead more

Still, the detention last August of Chyzh's closest business partner, Vladimir Yaprintsev, and his son Kazbek, was unexpected. Nineteenth in the ranking of the most influential businessman compiled by Ezhednevnik daily, Yaprintsev was arrested on suspicion of illegally channelling his money abroad. Now the Belarusian authorities are charging Yury Chyzh with doing the same.

Yaprintsev and Chyzh are now giving evidence against each other​. Their relations turned sour when their business empire started to crumble. In recent years Triple has started selling its assets, downsizing personnel and cutting expenses. This year, Chyzh failed to even make it into the Top 10 list of the most influential businesspeople, landing in 12th place.

Why the Belarusian authorities detained Chyzh

It seems that nobody believes that the Belarusian KGB can act without direct authorisation of Lukashenka in such high level cases. There are three possible explanations for what was behind the decision to go after the Chyzh business empire.

Version No 1: The Belarusian authorities are trying to raise money inside the country. Belarus desperately needs money and foreign creditors remain reluctant to work with Belarus. So the authorities need other ways to fill the gaps in the Belarusian budget. Chasing business people who have fallen out of favour with Lukashenka is one way. With Chyzh's empire tumbling because of disagreements with his business partners and falling oil prices, the authorities decided to take what they can.

As money stores in Belarus shrink, the competition for resources keeps increasing. Chyzh is not the only example. Several days after Chyzh's detention, the authorities arrested Yauhen Baskin, the largest producer of broiler meat in Belarus. Chyzh's arrest may be part of a larger campaign against Belarusian businessmen to raise funds.

Version No 2: Chyzh became a victim of an internal regime struggle. Chyzh, as one of only a few pro-market voices in the establishment and one of the richest Belarusians, has enough enemies. Now and then he has criticised government officials – in an interview given two years ago, but published by Narodnaja Volia newspaper only after his arrest, Chyzh proposed firing half of all bureaucrats.

Although he is far from being Belarus' Khodorkovsky, his strong position seems to have challenged the old guard, formed of officials, directors of state-run enterprises and law-enforcement agencies. And when Chyzh's business started to weaken, the KGB used the opportunity to lock him up in a Belarusian prison.

Version No 3: Belarus is cracking down on Russian businesses in the country. By disrupting Triple, the Belarusian authorities are also challenging the company's Russian shareholders who have leverage at the highest levels of the Russian establishment. Two minority stakes (16.75 per cent each) in Triple belong to Russian businessmen Iosif Aksentyev and Mikhail Mamiashvili. Both seem to mix business, political and criminal activities. It is possible that the Belarusian authorities want to disrupt the whole business empire linked to Aksentyev and Mamiashvili.

The Belarusian leadership has once again proved that it itself decides what to do about Russian business interests in Belarus. On a previous occasion, Minsk did not hesitate to arrest Vladislav Baumgertner, a top-manager of major Russian company Uralkali.

Whatever the reason for the arrest, it remains unlikely that Chyzh will spend much time behind bars. The Belarusian authorities have a tradition of freeing convicted officials and businessmen ahead of schedule if they show loyalty and pay compensation for their crimes.

But even if Chyzh leaves prison soon and saves at least part of his business, his case represents the epic fall of the most influential Belarusian businessman.

In March Ostrogorski Centre (OC) analysts discussed a variety of issues in the fields of foreign policy, religion and migration. As the economic crisis unfolds in Belarus and Russia, many Belarusians will seek refuge in the west, where Poland is providing increasingly attractive conditions for migrants from the former USSR.

Sweden is changing its approach towards cooperation with Belarus, shifting from only supporting civil society and the opposition to engaging the government.

Meanwhile, inside Belarus the authorities continue to search for an identity that could save them from the “Russian World”. They may try to reanimate the independent Greek Catholic Church.

Vadzim Smok analysesthe Card of the Pole – the Polish authorities' instrument to attract a young labour force from former USSR countries. As the negative demographic trend in Poland increases and the economic crisis across the post-Soviet space continues, an increase in the migration flow of Belarusians to Poland seems very likely. Many Belarusians see it as an opportunity to work and study in Poland with the prospect of getting EU citizenship. The Belarusian authorities definitely dislike the initiative, but have proved unable to counter it so far.

Ryhor Astapenia highlights the Belarusian authorities' seeming change in attitude towards the Greek-Catholic Church in Belarus, which has long been on the margins of public life. The situation is difficult because it has been criticised by the Orthodox Church, which commands the largest following in the country, and shunned by the Catholic Church, which is concerned that the Greek Catholics could undermine its already fragile relationship with the Orthodox Church.

Igar Gubarevich discusses the recent visit and talks of a delegation of the Swedish International Development Cooperation Agency (SIDA) with Belarus officials. SIDA used to have democratic activists and NGOs as its preferred partners in Belarus, but the situation seems to be changing. The Belarusian government has been stressing its greater openness to cooperation with Europe, and Sweden may try to see whether greater involvement of government actors in cooperation can be a more effective means of triggering policy change in Belarus.

Director of the Ostrogorski Centre Yaraslau Kryvoi takes part in consultations in Minsk on the political climate in Belarus with Acting Vice President of the European Bank for Reconstruction and Development (EBRD) Alain Pilloux and the head of EBRD Belarus office Francis Delaey (pictured).

Winners of research contest announced

On 15 March in Minsk the Ostrogorski Centre delivered a training session on writing up research for winners of a competition organised in cooperation with the Pontis Foundation and the Mott Foundation (pictured).

The selection panel approved five research projects on Belarusian foreign policy and education:

Belarusian Institute for Strategic Studies, 'Belarusian soft power in the region: evaluation of its potential and impact'

Belarusian State University, School of Business and Management of Technology, 'Conditioning factors of entrepreneurial activities of Belarusian students'

Centre for European Studies, 'The problem of modernisation of higher education in Belarus: social sciences and humanities'

Political Sphere Institute, 'Challenges for Belarusian foreign policy and the post-Soviet space after 2008'.

‘Belarusian Studies in the 21st Century’ Conference

Organisers released the programme for the Belarusian Studies in the 21st Century conference and Annual London Lecture on Belarusian Studies which will take place on 23-24 March 2016 in London. The conference will serve as a multidisciplinary forum of Belarusian studies in the West and offer a rare networking opportunity for researchers of Belarus.

It is organised by University College London's School of Slavonic and East European Studies (SSEES) and the Ostrogorski Centre in partnership with Francis Skaryna Belarusian Library and Museum, the Anglo-Belarusian Society and the Journal of Belarusian Studies. For those who complete the registration form before 22 March 2016, attendance is free. The programme is available here. The registration form is here.

Comments in the media

Ryhor Astapenia, analyst of the Ostrogorski Centre, explains to Polish Television 24 why Belarus detained major oligarch Jury Čyž. According to Astapenia, Čyž’s arrest is part of a struggle between different factions of the Belarusian regime and an attempt by the authorities to find money inside the country.

Siarhei Bohdan discusses with the Belarusian Programme of Polish Radiothe current situation in and around Syria. Bohdan sees the breakup of Syria as a likely scenario, as Kurds are receiving support from all over the world and Assad's army has made no major breakthrough, even with Russian support. He thinks that Iran's relations with the west will play a key role in determining the fate of Syria.

Igar Gubarevich gives Polish Radio a foreign policy forecast for 2016. He predicts that relations with the EU and US will get better, but will not lead to high-level mutual visits. Belarus will continue its old brotherhood game with Russia while at the same time trying to reduce dependence on it, and will make efforts to enhance cooperation with China.

Siarhei Bohdan discusses with the Belarusian Programme of Polish Radio the current situation around Iran and sanctions against this country. Influential groups in all countries are interested in rapprochement with Iran, yet many hindrances still remain.

Ryhor Astapenia in a comment to Polish Radio opines that the role of the opposition and civil society in the dialogue between Belarus and the West will decrease as a result of EU sanctions being lifted. In contrast, contact between officials and business will grow. However, this step will not bring more democracy to domestic politics in Belarus, as the authorities will continue to carry out occasional repression.